Should Goldman fight fraud charges?

TEXT OF STORY

Kai Ryssdal: You have to believe there were a couple of thoughts running through Goldman Sachs CEO Lloyd Blankfein's head during the president's speech today. One was probably: Hey, why are you pointing at me? Shady things were happening all over Wall Street two years ago. Another one was probably, OK, Goldman did nothing wrong. That's my line. I'm sticking to it. But, really, should we fight this fraud charge or not?

Outside Mr. Bankfein's head, shareholders have a definite opinion on that one as Marketplace's Jennifer Collins reports.

JENNIFER COLLINS: James Stewart is a columnist for SmartMoney Magazine. He also used to be a Goldman shareholder.

JAMES STEWART: My advice to Goldman Sachs would be to settle.

He says investors already lost confidence when the suit was filed. The firm's stock price has dropped more than 10 percent since then.

Nell Minow is with the Corporate Library. The firm researches businesses and their governance. She says a prolonged court battle could bring out devastating internal e-mails and reveal the way Goldman treats clients.

NELL MINOW: Because of the way Wall Street guys are, there will be e-mails saying we really put one over on them. We really killed them this time. That will be very embarrassing to them.

Minow says Goldman needs to do everything it can to improve its image among shareholders, clients, and the American public. Or else...

MINOW: It will be like the last scene in "Frankenstein." The villagers would be out there with the pitch forks and the torches.

"FRANKENSTEIN:" Get him alive if you can. But get him.

Nell Minow says the SEC also has an interest in settling the case because they don't have the resources for a long court battle. Others say Goldman has to be careful if it does settle.

Eric Talley teaches law at the University of California, Berkeley.

Eric Talley: The more important thing that's going to be at the negotiation table is going to be what is the SEC going to be requiring Goldman to cop to?

Because future cases could be built upon the things Goldman admits to or doesn't.